Commentary

Happy EITC Awareness Day… to those fortunate enough to live in states that haven’t eliminated this vital credit

EITC_ncToday marks a little known “holiday”: Earned Income Tax Credit (EITC) Awareness Day. The IRS-led national event is intended – as the title implies – to spread awareness about this modest but vital tax credit and make sure that all qualified workers receive it. The day is as much about educating people as to what exactly the EITC is as it is about directing individuals to sites where they can get free tax help to claim the credit. For those that do, often for just two or three years, it can mean the difference between struggling for another year and getting back on your feet.

In North Carolina, however, the day isn’t so simple. In fact it’s hard to find cause for celebration in the only state in the country to have eliminated the credit.

There are plenty of individuals who are fully aware of what the EITC means for their own lives as well as those of their neighbors, despite its absence in the Tar Heel state. Last year, NC Justice Center staff spoke to individuals across the state that had been directly impacted by the credit and acutely felt the loss of the EITC.

They talked about how the EITC arrived at the perfect moment in their lives: when they gave birth to a child with medical needs and struggled to pay hospital bills; when they were stuck in a low-wage job that wouldn’t allow them to save enough to pay off their debts; or when they were hoping to finally become a homeowner after relying on family and friends for shelter. These were all working North Carolinians. Their stories were familiar and at times heartbreaking. Some are still struggling, and others saw their families lifted out of poverty thanks in part to the EITC. They are the individuals who once relied on the EITC and urge policymakers to reinstate the credit – not only for themselves, but so that other families can feel the benefits.

A few basic facts on the state EITC that bear repeating: Read more

Falling Behind in NC, NC Budget and Tax Center

First in Flight from the EITC: Heather’s Story (VIDEO)

Lawmakers let the state Earned Income Tax Credit expire at the end of 2013, making North Carolina the first state in nearly 30 years to eliminate this proven anti-poverty tool. The state EITC helps promote shared economic prosperity for all North Carolinians. It goes only to working people with modest incomes, offering extra support to pay for basic necessities.

In a new video from the series “North Carolina: First in Flight from the EITC,” Heather Partridge talks about how the state EITC has helped her family. Heather lives with her husband and three daughters in Gibsonville, where she works at Hardee’s and earns $7.55 an hour – just barely above the state minimum wage of $7.25. In past years, the EITC has helped Heather pay for everyday goods for her children as well as pay off debt.  Read more

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New guidelines ensure all students have access to public education, regardless of their immigration status

Last week, the U.S. Department of Justice and U.S. Department of Education issued new guidelines that outline the legal responsibility of schools to enroll all students, regardless of a child’s or parent’s immigration status. It’s an important step in ensuring the right of every child to a public education, and fortunately is one that will be carried out here in North Carolina as well.

On May 12, State Superintendent June Atkinson sent a letter to all North Carolina school districts, reminding them of the policies that prohibit the schools from denying or delaying enrollment for students.

The letter reads:

School districts, whether through registration, student information verification, or other data collection, may not require Social Security numbers, may not ask questions regarding or evidence of immigration status, or for any other documentation that is not required in order to register or enroll in school.

Read more

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The new austerity agenda: What lawmakers failed to learn from the Great Depression

As we reflect on the 50 years since President Johnson waged a “War on Poverty,” it is important to also examine our public policy response to the more recent economic downturn that pushed many more Americans into poverty. The historic job loss of the Great Recession created a hardship deeper and more widespread than any previous modern recession, and recalled for many the Great Depression.

Yet policymakers’ response to growing poverty and countless struggling families across the U.S. was largely opposite that of the lessons learned from previous downturns.  Instead of pursuing robust stimulus spending to support struggling families or supporting job creation directly, policymakers opted for austerity.

Austerity is largely a term used to refer to European responses to the Great Recession but the American response took much the same tact. Policymakers dismantled investments in tools that have proven they can ameliorate families’ struggles for their most basic needs and maintain economic activity while the private sector recovers.  Austerity came to the United States in the form of lower-than-needed stimulus spending and spending cuts. Most recently, sequestration reduced government spending dramatically at a time when demand for services is high and the private sector has only reluctantly created jobs.

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Statement from Nicholas Johnson, VP for State Fiscal Policy at Center on Budget and Policy Priorities: NC Tax Plan Would Gut School Funding, Hurt State’s Economy

The tax plan that North Carolina’s Senate leaders unveiled yesterday should not be mistaken for tax reform. It is, in reality, a plan to gut North Carolina’s schools, public colleges and universities, infrastructure, and other key state investments that promote long-run prosperity.

The plan’s massive tax cuts, which would mainly benefit large corporations and the wealthy, would cost the state $1.3 billion each year once fully in place, roughly the entire annual budget for North Carolina’s community colleges. Blowing such a massive hole in the budget would jeopardize the quality public schools, nationally-recognized public university system, and other assets that have attracted businesses — and jobs — to the state in industries like financial services and scientific research.

Other states that considered similar proposals this year backed off in part because of the reality that huge tax cuts for the wealthy must be paid for with untenable reductions in funding for schools and other state services, tax hikes on others, or both. The North Carolina Senate’s plan ignores that reality and opts instead for wishful thinking.

Claims that the Senate plan will cause North Carolina’s economy to boom are simply empty promises. Any boost from cutting income taxes will be canceled out by the spending cuts or tax increases the state will be forced to adopt to balance its budget.

Elimination of the corporate income tax is largely a giveaway to multistate corporations that — rather than creating jobs — will likely stick the savings in an out-of-state bank or use it to pay higher dividends to stockholders, most of whom don’t live in North Carolina.

The plan’s personal income tax cuts won’t likely create jobs, either. Most small businesses would get a tax cut so small that it wouldn’t even cover one worker’s salary. Plus, small businesses rely on state education, roads, and other services that would degrade year after year under this plan.

To ensure a bright economic future, North Carolina should focus on strengthening the K-12 and higher education systems that have set the state apart in the past but faced deep cuts in recent years due to the recession. Blowing a huge hole in the state budget would make that crucial task much harder. North Carolina has nothing to gain and much to lose from the Senate’s misguided plan.